We are remodeling a brick house built in 1983. On the outside, the walls have 1 inch of foil-faced foam insulation. There’s no plywood sheathing — just 1x wood braces placed here and there for support.

After removing the interior drywall, we found R-13 batt insulation inside the walls, along with a polyethylene (plastic) vapor barrier. The insulation has several small spots of mold, likely caused by moisture getting trapped behind the vapor barrier.

My Questions:

1. Is it better to use spray foam or fiberglass BIBS with a smart vapor barrier in 2×4 walls for Climate Zone 5?

2. Since the exterior foil-faced foam is still in good shape, should it be left as is or upgraded?

3. What is the best way to prevent future mold issues when re-insulating the walls?